Avecia is an international specialty chemicals manufacturer. At the time of the Cinven acquisition, it comprised multiple divisions. Five of those divisions, Stahl, Performance Intermediates, Neoresins, Fine Chemicals and Pharmaceuticals and Electronic materials have been sold to date. The remaining business is the Biotechnology division, encompassing the Biologics and DNA manufacturing activities.
At acquisition, Cinven’s strategy for Avecia was to optimise a diverse portfolio of chemicals businesses by focusing on the higher growth divisions, such as the Biotechnology business, funding their growth with cash from the more stable businesses and the divestiture of the lower growth businesses.
Market shifts and softened demand adversely impacted the company’s results and therefore Cinven’s ability to execute the original strategy. In particular, the pace of growth originally anticipated in the divisions serving the pharmaceutical industry did not materialise principally because of changes in that industry. Cinven worked to mitigate the impact on the investment by significantly deleveraging the business through a disposal programme; changing the management team in line with the revised strategy; and implementing a restructuring programme to better manage the cost base. This provided the business with cash flow flexibility for the remaining Biotechnology division. The transaction completed in March 2011.